One of the best money management habits you can create is keeping accurate records of bank activity in a checkbook. Many people use a combination of cash, ATM and debit cards to make their purchases. Managing the flow of money in and out of your bank account can help maintain control of your finances. Balancing your checkbook is the most efficient way to develop money management skill and control your personal finances.
Balancing a checkbook is actually simple. The best time to write in a transaction is when the transaction is taking place. If you are making a deposit into your account, write it as a transaction in the checkbook. Verify the amount of the deposit, and check to make sure they are in the correct account, checking or savings, and make sure that your grand total after the deposit matches. That is the perfect time to easily spot an error. The error could be in the checkbook’s records, or a honest mistake by the bank teller. There could be a delay on the availability of the funds, or there could be an unknown freeze on some funds. Addressing these issues immediately could prevent inaccurate calculations later.
When making a withdrawal or completing a purchase with your debit or ATM card, write in the amount spent in exact amounts. Be sure to include any fees or separate charges that may be assessed to your account. ATM fees, overdraft fees, and monthly banking fees should be debited from the balance of the checkbook when they are taken out of the account to prevent additional fees.
When comparing your checkbook against your monthly banking statements, look for any errors. By updating the checkbook each time you make a withdrawal or make a purchase with your debit or ATM card, it will be easier to point out any inconsistencies and be able to address them quickly without fumbling through receipts and tracing back your spending habits by memory. If a problem or error is discovered, having a balanced checkbook can make handling that problem easier to solve. A checkbook that is regularly updated will itemize financial transactions. Each transaction can be easily traced back months, even years back to identify hidden problems. As another benefit, fees for insufficient and account overdrafts can be avoided by knowing the exact amount of funds in the bank account at all times.